Immediately after filing a bankruptcy case you have the ability to apply for credit. Most lenders are going to want to have you wait approximately 6 months to two years before extending you any kind of unsecured credit. You can apply for auto financing immediately after a bankruptcy filing. This is known as open bankruptcy financing and it could happen immediately upon filing. The more common approach is to wait until your discharge, and then apply for an auto loan.
My recommendation is to apply for a secured credit card after your bankruptcy case is filed. A secured credit card is issued by a bank utilizing money that you put on account at that bank. Thus, you have the convenience of credit or plastic, but you are really utilizing your own money on account. The benefit of a secured credit card is that it will report positively to the three major credit bureaus. After a short passage of time, approximately 6 months to one year, that secured credit card may very well turn into an unsecured credit card.
There is also a thought that you want to have three open trade lines after your bankruptcy case is filed. For many people, keeping their auto financing is the first trade line. The second trade line is the secured credit card that we have listed above. The final trade line can be a furniture purchase or an electronic purchase what you are paying for that item on installments. By having an auto, your secured card, and a furniture or electronic financing deal, you are accomplishing the three trade lines that will help improve your credit after a bankruptcy filing.
I often advise my clients to wait six months to two years before seeking any kind of significant credit. It’s a good idea for a couple of reasons. First, I want my clients to start using cash on a regular basis. By using cash, clients will start to appreciate exImmediately after filing a bankruptcy case you have the ability to apply for credit. Most lenders are going to want to have you wait approximatelyactly what they are spending per month. If they can get accustomed to living on a cash basis, then when they do receive credit in the future, they will not be apt to abuse it. The second reason why like my clients to deal with cash is that if they can wait six months or two years from their bankruptcy filing, the amount of credit, the cost of credit, and the availability of credit opportunities will be more advantageous to the client.
As you can see, you can obtain credit immediately after a bankruptcy filing. However, in my experience, it is best to wait six months to two years before you seek any kind of significant financing. I understand that there are some circumstances where you need financing immediately. In those cases, you have to get the financing that you desire. If you have the luxury of waiting, though, it’s best to do so.
